Can Samsung shares repeat last year\’s 40% rise?

Can Samsung Electronics’
shares rise another 40% this year?

Reuters

A worker on a lift aligns TVs and mirrors preparing the Samsung booth at the Consumer Electronics Show opening in Las Vegas January 9, 2012. The world\’s biggest technology trade show will feature razor-thin laptops, powerful new smartphones and fancy flat-screen TVs, but talk in the cavernous halls of the CES may focus on whether the show itself has a long-term future. REUTERS/Rick Wilking (UNITED STATES – Tags: BUSINESS SCIENCE TECHNOLOGY)

Japanese brokerage Nomura seems to think so, reiterating in a brokerage note Tuesday that it remains confident Samsung\’s Seoul-traded shares will eventually reach 2,000,000 won ($1,880.68) a piece. It released the research note after reviewing the company’s quarterly profit result.

The target price is more than 40% higher than Samsung’s 1,411.50 won close Tuesday. The share ended down 18.57 won, or 1.2%, for the session.

Earlier in the day Samsung said it expects to post an operating profit of 8.6 trillion won to 9 trillion won ($8.1 billion to $8.5 billion) for the October to December quarter, exceeding the previous quarter\’s record 8.06 trillion won. The range was ahead of Nomura’s estimate for an 8.6 trillion won operating profit, and also ahead of consensus estimates of 8.7 trillion won.

New smartphones and tablet models helped to underpin the strong result, Nomura said. Semiconductors and TVs also performed well, the analysts noted.

In spite of the outsized jump in the share price last year, earnings growth has largely kept pace. Samsung currently trades at 7.6 times forward price/earnings, a level that doesn’t look expensive, Nomura indicated.

Meanwhile it wasn\’t clear that currency fluctuations were poised to disrupt Samsung\’s performance in coming quarters. During the past year, gains in the South Korean currency against the U.S. dollar had a negative effect on the Samsung\’s component business, but tended to benefit other parts of its product line up.

“In net, the foreign exchange exposure seems to have worked slightly positively for overall performance despite the weak U.S. dollar,” Nomura said.

Nomura, in the same note, reiterated its recommendation for investors to buy the share.

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